11

Consumer Promotions
Chapter Overview
Types of consumer promotions Planning for consumer promotions Business-to-business promotions International consumer promotions
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Discussion Slide

11

Coupons
How often do you use coupons? What products do you tend to use coupons to purchase? Will a coupon affect which brand you buy? Why do you think companies offer so many coupons to consumers?

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FIGURE

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Types of Consumer Promotions

Coupons Premiums Contests and sweepstakes Refunds and rebates Sampling Bonus packs Price-offs
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A coupon accompanies this informational Gold Bond advertisement

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Influencing Brand Purchases

On a scale of 1 to 10, the following are the top five influences on the brand purchased by a consumer.

Sampling Word-of-mouth Coupons Advertising Contests

7.78 7.18 5.91 5.61 1.24

Source: The Second Annual Survey of Consumer Preferences for Product Sampling, Santella & Associates (Http://www.santella.com/marketing.htm).
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Percentage of Sales with a Coupon

Product category % of sales using manufacturers coupon

Disposable diapers Detergents Meal starters Dough products (refrigerated) Cereal Wrapping materials, bags Oral hygiene products Household cleaners
Source: AC Nielson Scantrack, Santella & Associates

17.1% 15.0% 14.2% 13.6% 13.4% 12.8% 11.7% 11.7%

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FIGURE

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Methods of Distributing Coupons

Print media (88%)

FSI (80%)

Direct mail (4%) On, in or near package (3%)

Cross-ruff

Other methods (5%)

In-store Sampling Scanner-delivered Response offer Internet Fax Sales staff
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Types of Coupons
Instant redemption Scannerdelivered Cross-ruffing Response offer U-pons

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Coupon Redemption Rates

Type of coupon Instant redeemable Bounce-back Instant redeemable cross ruff Electronic shelf Electronic checkout In-pack On-pack Direct mail Handout Free standing inserts
Source: Santella & Associates
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Avg. Redemption Rate 39.3% 17.2% 17.1% 10.2% 7.8% 5.8% 4.7% 3.5% 3.1% 1.3%

Problems with Coupons

Reduced revenues Mass cutting Counterfeiting Misredemption Dependency

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Factors Affecting Coupon Effectiveness

Face value of coupon. Distribution method. Coupon for preferred brand or brand in evoked set.

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STOP

INTEGRATED LEARNING EXPERIENCE

Coupon Distribution and Marketing Services

Coupons.com, Inc. Http://www.coupons.com/Advertising.asp Coupon Country/Kaufman Advertising Http://www.couponcountry.com

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Types of Premiums
Free-in-the-mail In- or on-package Store or manufacturer Self-liquidating

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Fisher Boy
Free, in-the-mail premium

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Fast-food chains are well known for their instore premiums.

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FIGURE

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Keys to Successful Premiums

Match the premium to the target market. Carefully select the premiums.
(Avoid fads, try for exclusivity)

Pick a premium that reinforces the firms product and image. Integrate the premium with other IMC tools.
(Especially advertising and POP displays)

Dont use premiums to increase profits.

Source: Based on Don Jagoda, The Seven Habits of Highly Successful Premiums, Incentive, (August 1999), Vol. 173, Issue 8, pp. 104-105. 11-16

Creating Successful Contests and Sweepstakes

Know the legal restrictions. Do we want losers? Must overcome clutter. Find the right combination of prizes. Look for tie-in opportunities with special events or other companies. Must be coordinated with POP Displays and other marketing tools.
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STOP
Sweepstakes Builder

INTEGRATED LEARNING EXPERIENCE

Http://www.sweepstakesbuil der.com

Promotions Activators, Inc.

Http://www.promotionactivat ors.com

ADPAC Corporation
Http://www.adpaccorp.com

How can these firms assist in the development of a contest or sweepstake? What other promotional services can they provide? What are the advantages and disadvantages of using one firm for multiple or all of the consumer promotions?

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Successful Rebate/Refund Programs

Visibility is necessary Encourages customers to act Should not be too complicated Avoid becoming a permanent component of the purchase decision (automobile rebates) Should be easy and profitable for retailers
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FIGURE
Types of Sampling

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In-store distribution Direct sampling Response sampling Cross-ruff sampling Media sampling Professional sampling Selective sampling
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Experiment Impact of In-Store Sampling

Product Previous 4 weeks Sampling Week Following 4 weeks

Meat product A Meat product B Meat product C Bread product Biscuit product A Biscuit product B

100% 100% 100% 100% 100% 100%

430% 590% 185% 170% 359% 201%

110% 123% 100% 90% 64% 49%

Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, The Effect of In-Store Sampling on the Sale of Food Products, Marketing Bulletin, 1990, Vol. 1, pp 1-6. 11-21

Experiment Impact of In-Store Sampling on Competitors

Product

Previous 4 week

Sampling week

Following 4 weeks

Bread product Competitor A Competitor B Competitor C

100% 100% 100% 100%

170% 106% 79% 78%

90% 105% 93% 86%

Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, The Effect of InStore Sampling on the Sale of Food Products, Marketing Bulletin, 1990, Vol. 1, pp 16. 11-22

Discussion Slide

Sampling
How effective would sampling be for the goods and services listed on the right? How would you design a sampling program that would be effective, yet not too costly? What type of consumers would you target for the sampling?

Fitness center Ice cream Dental service Clothing manufacturer Auto repair service Office supply store B-to-B consulting service B-to-B supplier of raw materials such as sugar, flour, etc. to bakeries.

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FIGURE

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Reasons for Using Bonus Packs

Increase usage of the product Match or pre-empt competitive actions Stockpiling of product Develop customer loyalty Attract new users Encourage brand switching
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Price-Offs
Temporary reduction in price. Excellent for boosting short-term sales. Excellent for generating customer traffic. Can be implemented easily. Must be careful not to increase customer price sensitivity. Can have detrimental impact on brand and corporate image.
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Impact of Price-off on Consumer Purchase

Consumer purchased because of sale price 9%

Consumer unaware item was on sale. 51%

Consumer would have purchased item anyway 40%

Source: Studies Indicate Coupons are an Effective Promotional Tool, Santella & Associates (http://www.santella.com/coupon.htm) 11-26

Promotion Combinations
Over-lay Intra-company tie-in Inter-company tie-in

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Types of Consumers
Promotion prone consumers Brand loyal consumers Price sensitive consumers

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STOP
What type of sales promotions are offered? What do you think are the objectives of the consumer promotions? Are the promotions offered on the Web site consistent with their advertising and promotions offered at retail outlets?

INTEGRATED LEARNING EXPERIENCE

Consumer Promotions on the Internet

Quaker State Http://www.quakerstate.com Taco Bell Http://www.tacobell.com Kraft Foods Http://www.kraft.com Jockey Http://www.jockey.com Avon Http://www.avon.com Lee Jeans Http://www.leejeans.com
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Business-to-Business Consumer Promotions

18.7% of B-to-B marketing budgets spent on sales promotions. Coupons Premiums Sweepstakes and contests Sampling Bonus packs

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International Consumer Promotions

Difficult to centralize consumer promotion programs. Laws vary across countries. Difference in distribution rates Requires an experienced international sales promotion coordinator.

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Redemption Rates Distribution Methods

Redemption Rate Media Newspaper Magazine Door to door In/on pack In store FSI Mailing Overall average England 1.9% 2.8% 11.0% 25.1% 27.7% 12.0% ----6.8% Italy ----1.4% 13.7% 20.3% 32.3% ----6.6% 14.3% Spain 1.4% 1.4% 12.9% 30.7% 28.2% --------16.0% U.S. 0.8.% 0.3% ----9.2% 6.8% 1.4% 3.6% 2.0% England 26% 13% 18% 15% 19% 1% ----Distribution Method Italy ----5.7% 2.0% 63.2% 22.1% ----6.5% Spain 10.0% 14.7% 43.0% 25.2% 5.5% --------U.S. 1.9% 4.2% ----2.5% 1.9% 85.4% 1.1%

Sources: "International Coupon Trends," Direct Marketing, Volume 56, Issue 4 (August 1993), pp. 47-49; "FSI Coupon Redemption Rate for Frozen Foods," Frozen Food Age, Volume 47, Issue 3 (October 1998), p. 70.
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Building Your IMC Campaign

Choose the best promotions for your product and desired product image. Ensure there is a synergy between the advertising plan, trade promotions and consumer promotions. Select an agency to design and handle the consumer promotion program.

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